Dahl's files Chapter 11, will sell to AWG
Dahl’s Foods filed for Chapter 11 bankruptcy protection and has agreed to be acquired by its supplier and largest creditor, Associated Wholesale Grocers.
Dahl’s Foods filed for Chapter 11 bankruptcy protection and has agreed to be acquired by its supplier and largest creditor, Associated Wholesale Grocers.
Employee-owned Dahl’s operates 10 stores in Iowa. It reported $136.8 million in sales for the fiscal year ended June 28.
Kansas City, Kan.-based AWG has entered into an agreement to buy Dahl’s operating assets, making an undisclosed “stalking horse” offer subject to a court-approved auction. According to AWG, the acquisition would allow a member of the cooperative to take over the stores and rebrand them. AWG did not disclose which member it intended to acquire the stores for.
In documents filed with U.S. Bankruptcy Court in Des Moines, Dahl’s revealed it had been in financial trouble for some time, attributing its struggles to having reacted too slowly to competitive threats, then overleveraging in attempts to catch up.
“As we continue to seek the capital needed to maintain a competitive position within the communities Dahl’s serves this [bankruptcy] was the best option,” Dahl’s CEO Craig Moore said in a statement. “Our board has approved the sale of the company, which will ensure that the stores come out of this stage successfully. Right now, our focus is on preserving our workforce and continuing to provide a competitive and connected store experience for our customers.”
Follow @SN_News for updates throughout the day.
Dahl’s joined AWG in 2011 seeking a lower cost of doing business and additional financial resources, entering into a series of financing transactions including sale-leaseback of some properties and other loans. In 2013, Dahl’s engaged the Food Paretners to assist in decision making and brought Moore aboard as CEO. An operational turnaround under Moore was delivering results more slowly than anticipated, Dahl’s said.
Dahl’s listed assets of $179,875 and debts of $36.2 million — nearly all to AWG. It said it had agreed to a financing package with AWG providing up to $3 million in new post-petition financing.
“Our intentions for entering into the agreement to purchase Dahl’s Foods are to provide an opportunity for a member of our cooperative to successfully enter the Des Moines grocery market, with some good locations, and to gain a strong and experienced workforce, which is already in the stores,” Jerry Garland, president and CEO of AWG, said in a statement. “We envision that once acquired… the stores will be remodeled and updated, and steps will be taken to build a new brand and identity for the Dahl’s stores, and ultimately the consumers of Des Moines can be provided with a better selection and value in locations which are familiar and staffed by friends and neighbors.”